US crude oil futures rose to a new record high for a second day today, with crude oil futures for June delivery touching a record of $120.70 a barrel.
London Brent crude oil futures set a new record of $119.03 a barrel.
Supply disruptions in Nigeria have helped push oil to new peaks. Royal Dutch Shell's production from Nigeria, for example, is down by about 164,000 barrels per day.
Strikes and attacks by militants on oil installations have caused a succession of supply problems in the Opec member country, the world's eighth-biggest oil exporter.
Weakness in the US dollar has also contributed to oil's rise, as this had boosted the price of commodities denominated in the US currency.
Geopolitical uncertainties in Iran lent support after the world's fourth largest oil producer said yesterday it would not consider any incentive offered by world powers that would constrain its right to nuclear technology.
Iran's nuclear issue added to growing violence in Nigeria, the world's eighth-largest oil exporter, where Royal Dutch Shell had to shut more of its production after a militant attack on Saturday in the oil-rich Niger Delta.
Renewed clashes between Turkey and Kurdish rebels in northern Iraq last week also helped lift oil prices.
US President George W. Bush, who has called upon oil cartel Opec to increase output to help bring down prices, is expected to talk with officials from Saudi Arabia about the effects of high fuel prices on the US economy on his trip to the world's top exporter later this month.
The US dollar, whose softening in the past months has been driving speculative investments in dollar-denominated crude and other commodities, slipped further today on continued doubts about the health of the US economy despite upside surprises from recent economic indicators.
US payrolls fell by 20,000 jobs in March, a quarter of the losses expected, government data showed on Friday, while a report yesterday from the Institute for Supply Management showed the US service sector grew unexpectedly in April.
Later in the week on Wednesday, traders will eye the weekly US government report on inventories, which is expected to show a 1.8 million-barrel build in crude stocks, a 1.1 million-barrel rise in distillate inventories and a 100,000-barrel fall in petroleum stocks.
Indonesia is considering quitting Opec as the country's crude oil output had declined, the country's President Susilo Bambang Yudhoyono said today. Indonesia is the Asia-Pacific's only member of the cartel, but its crude oil has fallen in recent years because of ageing wells and lack of investment.
"We are studying whether we have to stay in Opec or leave. We are now a crude oil importer and our production has declined to below one million barrels," YMr udhoyono told reporters. He was referring to the country's daily output.
Reuters